<PAGE>
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
- --------------------------
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
IAT Multimedia, Inc.
------------------------------------------
(Name of Registrant as Specified in Its Charter)
--------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
<PAGE>
IAT MULTIMEDIA, INC.
Geschaftshaus Wasserchloss
Aarestrasse 17
CH-5300
Vogelsang-Turgi
Switzerland
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Our Stockholders:
Notice is hereby given that the Annual Meeting of the Stockholders of IAT
Multimedia, Inc. will be held on September 27, 1999, at 10:00a.m. local time at
the offices of Lowenstein Sandler PC, 65 Livingston Avenue, Roseland, New Jersey
07068. The Annual Meeting is called for the following purposes:
1. To elect a board of five directors;
2. To approve and ratify the appointment of Rothstein, Kass & Company, P.C.
as our independent auditors; and
3. To consider and take action upon such other matters as may properly come
before the meeting or any adjournment or adjournments thereof.
The close of business on August 23, 1999 has been fixed as the record date
for the determination of stockholders entitled to notice of, and to vote at, the
Annual Meeting. Our stock transfer books will not be closed.
All stockholders are cordially invited to attend the Annual Meeting.
Whether or not you expect to attend, you are respectfully requested by the Board
of Directors to sign, date and return the enclosed proxy promptly. Stockholders
who execute proxies retain the right to revoke them at any time prior to the
voting thereof. A return envelope which requires no postage if mailed in the
United States is enclosed for your convenience.
By Order of the Board of Directors,
Jacob Agam
Chairman of the Board and Chief Executive Officer
Dated: August 30, 1999
<PAGE>
IAT MULTIMEDIA, INC.
Geschaftshaus Wasserchloss
Aarestrasse 17
CH-5300
Vogelsang-Turgi
Switzerland
-------------
PROXY STATEMENT
-------------
ANNUAL MEETING OF STOCKHOLDERS
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of IAT Multimedia, Inc., a Delaware
corporation, for the Annual Meeting of Stockholders to be held at the offices of
Lowenstein Sandler PC, 65 Livingston Avenue, Roseland, New Jersey 07068, on
September 27, 1999 at 10:00a.m. and for any adjournment or adjournments thereof,
for the purposes set forth in the accompanying Notice of Annual Meeting of
Stockholders. Any stockholder giving such a proxy has the power to revoke it at
any time before it is voted. Written notice of such revocation should be
forwarded directly to our Chief Financial Officer, at the above stated address.
Attendance at the Annual Meeting will not have the effect of revoking the proxy
unless such written notice is given or the stockholder votes by ballot at the
Annual Meeting.
If the enclosed proxy is properly executed and returned, the shares
represented thereby will be voted in accordance with the directions thereon and
otherwise in accordance with the judgment of the persons designated as proxies.
Any proxy on which no direction is specified will be voted in favor of the
actions described in this Proxy Statement, including the election of the
nominees set forth under the caption "Election of Directors" and the approval
and ratification of the appointment of Rothstein, Kass & Company, P.C. as our
independent auditors.
The approximate date on which this Proxy Statement and the accompanying
form of proxy will first be mailed or given to our stockholders is August 30,
1999.
Your vote is important. Accordingly, you are urged to sign and return the
accompanying proxy card whether or not you plan to attend the Annual Meeting. If
you do attend, you may vote by ballot at the Annual Meeting, thereby cancelling
any proxy previously given.
2
<PAGE>
VOTING SECURITIES
Only holders of shares of our common stock, par value $.01 per share, of
record as of the close of business on August 23, 1999, are entitled to notice of
and to vote at the Annual Meeting. On the record date there were issued and
outstanding 9,863,363 shares (excluding treasury shares) each entitled to one
vote upon all matters to be acted upon at the Annual Meeting. One-third of the
outstanding shares entitled to vote on any matter and represented at the Annual
Meeting in person or by proxy shall constitute a quorum. Assuming a quorum is
present, the affirmative vote of a plurality of the 9,863,363 shares so
represented and entitled to vote is necessary to elect the directors, and the
affirmative vote of a majority of the 9,863,363 shares so represented and
entitled to vote, excluding broker non-votes, is necessary to approve the
appointment of Rothstein, Kass & Company, P.C. as our independent auditors.
Abstentions and broker non-votes are counted for purposes of determining the
presence or absence of a quorum for the transaction of business. If a
stockholder, present in person or by proxy, abstains on any matter, the
stockholder's shares will not be voted on such matter. Thus, an abstention from
voting on any matter has the same legal effect as a vote "against" the matter,
even though the stockholder may interpret such action differently. Except for
determining the presence or absence of a quorum for the transaction of business,
broker non-votes are not counted for any purpose in determining whether a matter
has been approved.
Our functional currency is the Swiss Franc. The functional currency of
certain of our subsidiaries is the German Deutsche Mark. References to "U.S.
Dollars" or "$" are to United States currency, and references to "Deutsche Mark"
or "DM" and "Swiss Franc" or "SF" are to the German and Swiss currencies,
respectively. We have presented our consolidated financial statements in
accordance with generally accepted accounting principles in the United States in
U.S. Dollars. Amounts originally measured in Deutsche Mark and Swiss Franc for
all periods presented have been translated into U.S. Dollars in accordance with
the methodology set forth in Statement of Financial Accounting Standards No. 52.
For the convenience of the reader, translations of certain Deutsche Mark or
Swiss Franc amounts into U.S. Dollars have been included herein, but should not
be construed as a representation that such Deutsche Mark or Swiss Franc amounts
actually represent such U.S. Dollar amounts or could be, or could have been,
converted into U.S. Dollars at the rates indicated or at any other rate. This
rate may differ from the actual rates in effect during the periods covered by
the financial information discussed herein.
3
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
AND PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding ownership of
our common stock as of August 23, 1999 by (i) each of our directors, (ii) each
of our executive officers named under "Executive Compensation," (iii) each
person known by us to own beneficially more than five percent of our outstanding
common stock, and (iv) all of our executive officers and directors as a group.
Unless otherwise indicated, the address of these directors and officers is c/o
IAT Multimedia, Inc., Geschaftshaus Wasserschloss, Aarestrasse 17, CH-5300
Vogelsang-Turgi, Switzerland. Beneficial ownership is defined in accordance with
the rules of the SEC and generally means the power to vote and/or to dispose of
the securities regardless of any economic interest therein. In computing number
and percentage ownership of shares of our common stock beneficially owned by a
person, shares of common stock subject to options held by that person that are
exercisable within 60 days are deemed outstanding. Such shares of our common
stock, however, are not deemed outstanding for purposes of computing the
percentage ownership of stockholders other than such person.
We have been advised that Vertical Financial Holdings Establishment owns
equity interests in Behala Anstalt, Lupin Investments Services Ltd. and Henilia
Financial Ltd. and that Vertical has agreements with third party investors in
each such entity. These entities beneficially own an aggregate of 660,526 shares
of common stock and 890,151 shares of common stock issuable upon exercise of
warrants. These equity interests and agreements entitle Vertical to varying
percentages of the profits resulting from the sale of the shares of each of
these entities. Under agreements with each of these entities, the trustee of
each such entity has voting and dispositive power over the shares held by that
entity, although Vertical retains the right to appoint or terminate the
appointment of the trustee.
<TABLE>
<CAPTION>
Percentage of
Number of Shares Shares
Name and Address Beneficially Beneficially
of Beneficial Owner Owned Owned (%)
- ------------------- ----- ---------
<S> <C> <C>
Jacob Agam (1)................................ --- ---
Klaus Grissemann.............................. 239,395 (2) 2.4%
Marc Goldfarb (3)............................. --- ---
Alfred Simmet (4)............................. 146,949 1.5
Viktor Vogt................................... 227,938 (5) 2.3
Volker Walther (6)............................ 940,750 (7) 9.5
Franz Muller (8).............................. --- ---
Erich Weber................................... 10,000 (9) *
Robert Weiss ................................. 10,000 (9) *
Behala Anstalt (10)........................... 592,804 (11) 6.0
Lupin Investments Services Ltd. (12).......... 592,804 (13) 6.0
Klaus-Dirk Sippel (14)........................ 1,055,923 (15) 10.7
Richard Suter (16)............................ 721,551 (17) 7.3
Vertical Financial Holdings (18).............. 1,580,304 (19) 16.0
All of our executive officers and directors
as a group (7 persons).................. 1,428,083 (20) 14.5
</TABLE>
- ---------------
* Less than 1%
(1) Jacob Agam, our Chairman and Chief Executive Officer, is the Chairman of
the Board of Vertical Financial Holdings, a company organized under the
laws of Liechtenstein, which beneficially owns 1,580,304 shares of common
stock. Pursuant to an agreement between Orida Capital Ltd. and Vertical,
Orida has the right to receive a portion of the profits from the sale of
the shares of common stock held by Vertical. Mr. Agam is
4
<PAGE>
the Chairman of Orida. Excludes an aggregate of 660,526 shares of our
common stock and 890,151 shares of our common stock issuable upon exercise
of warrants held by Behala Anstalt, Lupin Investment Services Ltd. and
Henilia Financial Ltd. Mr. Agam disclaims beneficial ownership of the
shares held by Vertical, Behala, Lupin and Henilia.
(2) Includes:
o 15,151 shares of common stock which are held in escrow but in respect
of which Mr. Grissemann retains the power to vote; and
o 50,000 shares of common stock issuable upon exercise of options that
are exercisable within 60 days.
See "Certain Relationships and Related Transactions -- Escrow Shares."
(3) Marc Goldfarb, a director nominee, is the President and Managing Director
of Orida Capital USA, Inc., an affiliate of Orida Capital Ltd. Pursuant to
an agreement between Orida Capital Ltd. and Vertical, Orida Capital Ltd.
has the right to receive a portion of the profits from the sale of the
shares of common stock held by Vertical.
(4) Dr. Simmet resigned as an officer of IAT Multimedia effective December 31,
1998.
(5) Includes:
o 69,605 shares of common stock which are held in escrow but in respect
of which Dr. Vogt retains the power to vote; and
o 58,333 shares of common stock issuable upon exercise of options that
are exercisable within 60 days. Excludes 16,667 shares of common
stock issuable upon exercise of options that are not exercisable
within 60 days.
See "Certain Relationships and Related Transactions -- Escrow Shares."
(6) Volker Walther's address is Pohlweg 44, D-33098, Paderborn.
(7) Includes:
o 831,985 shares of common stock held by Walther Glas GmbH of which Mr.
Walther is the majority shareholder, of which 12,495 shares of common
stock are held in escrow but in respect of which Walther Glas GmbH
retains the power to vote;
o 58,765 shares of common stock which are held in escrow but in respect
of which Mr. Walther retains the power to vote; and
o 50,000 shares of common stock issuable upon exercise of options that
are exercisable within 60 days.
Mr. Walther has agreed to transfer 130,000 shares of common stock to Mr.
Sippel pursuant to an agreement with Mr. Sippel.
See "Certain Relationships and Related Transactions -- Escrow Shares."
(8) Mr. Muller resigned as an officer of IAT Multimedia in April 1998.
(9) Represents 10,000 shares of common stock issuable upon exercise of options
that are exercisable within 60 days.
(10) The address of Behala Anstalt is Heiligkreuz 6, PL-9490 Vaduz,
Liechtenstein.
5
<PAGE>
(11) Includes:
o 296,402 shares of common stock issuable upon exercise of warrants
beneficially owned by Behala Anstalt and exercisable within 60 days;
and
o 23,712 shares of common stock which are held in escrow but in respect
of which Behala Anstalt retains the power to vote.
See "Certain Relationships and Related Transactions -- Escrow Shares."
(12) The address of Lupin Investments Services Ltd. is P.O. Box 3186, Road Town,
Tortola, British Virgin Islands.
(13) Includes:
o 296,402 shares of common stock issuable upon exercise of warrants
beneficially owned by Lupin Investments Services Ltd. and exercisable
within 60 days; and
o 23,712 shares of common stock which are held in escrow but in respect
of which Lupin Investments Services Ltd. retains the power to vote.
See "Certain Relationships and Related Transactions -- Escrow Shares."
(14) The address of Klaus-Dirk Sippel is Tannenweg 2, CH-5415 Nussbaumen,
Switzerland.
(15) Includes:
o 398,864 shares of common stock issuable upon exercise of warrants
beneficially owned by Klaus-Dirk Sippel and exercisable within 60
days; and
o 56,565 shares of common stock which are held in escrow but in respect
of which Mr. Sippel retains the power to vote.
Excludes 76,941 shares sold in October 1996 by Mr. Sippel to Mr. Jurgen
Henning. While Mr. Sippel does not have any voting or dispositive power
with respect to these shares, an agreement between Messrs. Sippel and
Henning provides that Mr. Sippel will share in the proceeds of the sale of
Mr. Henning's shares. Also excludes 130,000 shares of common stock which
Mr. Walther has agreed to transfer to Mr. Sippel pursuant to an agreement
with Mr. Sippel.
See "Certain Relationships and Related Transactions -- Escrow Shares."
(16) Richard Suter's address is Lendikerstrasse 25, CH-8484 Weisslingen,
Switzerland.
(17) Includes:
o 198,864 shares of common stock issuable upon exercise of warrants
beneficially owned by Richard Suter and exercisable within 60 days;
and
o 45,815 shares of common stock which are held in escrow but in respect
of which Mr. Suter retains the power to vote.
See "Certain Relationships and Related Transactions -- Escrow Shares."
(18) The address of Vertical Financial Holdings Establishment is
Hombrechtikerstrasse 61, CH-8640 Rapperswil, Switzerland.
(19) Includes:
o 690,152 shares of common stock issuable upon exercise of warrants
beneficially owned by Vertical and exercisable within 60 days; and
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<PAGE>
o 71,212 shares of common stock which are held in escrow but in respect
of which Vertical retains the power to vote.
Excludes an aggregate of 660,526 shares of common stock and 890,151 shares
of common stock issuable upon exercise of warrants held by Behala Anstalt,
Lupin Investments Services Ltd. and Henilia Financial Ltd. Vertical has the
right to receive a percentage of the proceeds from the sale of shares by
these entities. Also excludes 69,605 shares of common stock owned by Dr.
Vogt in which Vertical does not have any voting or dispositive power.
However, under an agreement between Vertical and Dr. Vogt, Vertical has the
right to receive a portion of the proceeds of the sale of these shares by
Dr. Vogt.
See "Certain Relationships and Related Transactions -- Escrow Shares."
(20) Includes:
o 156,016 shares of common stock which are held in escrow but in
respect which the officers and directors retain the power to vote;
and
o 178,333 shares of common stock issuable upon exercise of options that
are exercisable within 60 days.
Excludes 16,667 shares of common stock issuable upon exercise of options
that are not exercisable within 60 days. Also excludes shares of common
stock beneficially owned by:
o Dr. Simmet and Mr. Muller who resigned as officers of IAT Multimedia;
and
o Vertical, of which Mr. Agam is Chairman of the Board.
ELECTION OF DIRECTORS
At the Annual Meeting, five directors will be elected by the stockholders
to serve until the next Annual Meeting of Stockholders or until their successors
are elected and shall qualify. Except for Marc Goldfarb, each of the nominees is
currently a director of IAT Multimedia. Management recommends that the persons
named below be elected as directors of IAT Multimedia and it is intended that
the accompanying proxy will be voted for the election as directors of the five
persons named below, unless the proxy contains contrary instructions. We have no
reason to believe that any of the nominees will not be a candidate or will be
unable to serve. However, in the event that any of the nominees should become
unable or unwilling to serve as a director, the persons named in the proxy have
advised that they will vote for the election of such person or persons as shall
be designated by management.
Viktor Vogt, a director since October 1996 and a consultant to IAT
Multimedia, and Volker Walther, a director since December 1996, are not standing
for re-election to the Board of Directors. Following the Annual Meeting, there
will be one vacancy on the Board of Directors. The Board of Directors has
commenced a search to fill such vacancy, and, pursuant to our Bylaws, may fill
such vacancy at such time as the Board of Directors identifies a suitable
candidate. The director elected by the Board of Directors to fill this vacancy
will serve until the next Annual Meeting of Stockholders or until his successor
is elected and shall qualify. Stockholders may not vote, or submit a proxy, for
a greater number of nominees than the five nominees named below.
The following sets forth certain information relating to the five nominees
for election to the Board of Directors.
JACOB AGAM (44) has served as our Co-Chairman of the Board since our
organization in October 1996 and became our Chairman and our Chief Executive
Officer in April 1998. Mr. Agam has served as the Chairman of the Board and
Chief Executive Officer of Gruppo Spigadoro N.V., a Dutch holding company
operating in the Italian food and animal feed markets, since September 1998. Mr.
Agam is a founder and Chairman of Orida Capital Ltd. and Vertical Capital Ltd.,
each a merchant banking and venture capital firm since their inception in 1993,
and the Chairman of Vertical Financial Holdings, a principal stockholder of IAT
Multimedia, since 1995. Mr. Agam, in his
7
<PAGE>
capacity as Chairman of Orida, spends a portion of his business time providing
services to companies other than IAT Multimedia. Orida provides services for
Vertical pursuant to an agreement between Orida and Vertical. Mr. Agam received
a law degree from Tel Aviv University in 1984 and an LLM degree in securities
and corporate finance from the University of Pennsylvania in 1986.
KLAUS GRISSEMANN (56) has served as our Chief Financial Officer since our
organization in October 1996 and has served as a director since December 1996.
Mr. Grissemann joined IAT AG, a subsidiary of IAT Multimedia, in 1989 as Chief
Financial Officer and has served as a director of IAT AG since 1993. From 1979
until 1988, Mr. Grissemann was Chief Financial Officer of Jaeger Le Coultre AG,
a Swiss watch manufacturer. Mr. Grissemann graduated from Kantonale
Handelsschule business school in Zurich.
MARC S. GOLDFARB (35) is a director nominee. Since August 1998, Mr.
Goldfarb has been the President and Managing Director of Orida Capital USA,
Inc., a consulting firm that is the U.S. representative of the Vertical Group, a
global merchant banking firm, and an affiliate of Orida Capital Ltd. Prior to
joining Orida Capital, Mr. Goldfarb was a corporate and securities attorney for
over 10 years, most recently as a partner at Bachner, Tally & Polevoy LLP in New
York, where he specialized in corporate finance, venture capital and mergers and
acquisitions. Mr. Goldfarb also serves on the Board of Directors of Gruppo
Spigadoro N.V., a Dutch holding company operating in the Italian food and animal
feed markets. Mr. Goldfarb holds a B.S. degree in Management and Industrial
Relations from Cornell University and a J.D. from the University of Pennsylvania
Law School.
DR. ERICH WEBER (57) has served as a director of IAT Multimedia since June
1998. Dr. Weber's expertise is in information automation. Dr. Weber has served
in management of Revi Informatik, a data processing consulting company, since
1992 following ten years as a partner and manager of electronic data processing
consulting of Revisuisse Price Waterhouse, Zurich. Prior thereto, he was a
department manager of infomatics for Migros Genossenschaftsbund and Alusuisse.
Dr. Weber earned his doctorate in Economic Science from the University of Zurich
in 1970.
ROBERT WEISS (52) has served as a director of IAT Multimedia since June
1998. In 1980 Mr. Weiss founded Robert Weiss Consulting, an independent
electrical engineering consultancy, and has served as its President since 1980.
Previously, he served nine years as a consultant to Alusuisse in its
headquarters and department of research and development. Mr. Weiss received a
degree in Chemistry from Technical College Winterthur in 1970.
All directors hold office until the next Annual Meeting of Stockholders or
until their successors are elected and qualified; vacancies and any additional
positions created by board action are filled by action of the existing Board of
Directors. All officers serve at the discretion of the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES NAMED
ABOVE, AND THE PERSONS NAMED IN THE ACCOMPANYING PROXY WILL VOTE IN ACCORDANCE
WITH THE CHOICE SPECIFIED THEREON OR, IF NO CHOICE IS PROPERLY INDICATED, IN
FAVOR OF EACH OF THE NOMINEES NAMED ABOVE.
RIGHTS TO NOMINATE DIRECTORS
So long as Vertical holds at least 10% of the 1,875,000 shares of common
stock issued by us upon conversion of our Series A Preferred Stock in April 1997
or the 1,875,000 shares of common stock issuable upon exercise of the warrants
issued to certain stockholders, Vertical has the right, but not the obligation,
to nominate two persons as members of the management slate for election to our
Board of Directors. So long as Vertical holds at least 5% of the 1,875,000
shares of common stock issued by the Company upon conversion of its Series A
Preferred Stock in April 1997 or the 1,875,000 shares of Common Stock issuable
upon exercise of the warrants issued to certain of our stockholders, Vertical
has the right, but not the obligation to nominate one such person. Mr. Agam, our
Chairman of the Board and Chief Executive Officer, and Mr. Goldfarb, a director
nominee, were nominated by Vertical. The existence of such rights increases the
control over us by Vertical. See "Certain Relationships and Related Transactions
- -- Stock Purchase Agreement and Related Transactions."
8
<PAGE>
COMMITTEES OF THE BOARD OF DIRECTORS
Audit Committee
The Audit Committee consists of Messrs. Walther, Weber and Weiss. The
primary functions of the Audit Committee are to recommend engagement of our
independent public accountants and to maintain communications among such
independent accountants, the Board of Directors and our internal accounting
staff with respect to accounting and audit procedures, the implementation of
recommendations by such independent public accountants, the adequacy of our
internal controls and related matters.
Compensation Committee
The Compensation Committee consists of Messrs. Walther, Grissemann, Weber
and Weiss. The principal functions of the Compensation Committee are to review
the management organization and development, review significant employee benefit
programs, including bonus plans, stock option and other equity-based programs,
deferred compensation plans and any other cash or stock incentive programs and
advise the Board of Directors accordingly. We do not have a nominating
committee.
BOARD AND COMMITTEE MEETINGS
During fiscal 1998, the Board of Directors met three times, the Audit
Committee met one time and the Compensation Committee did not meet. Each of the
directors attended at least 75% of the aggregate number of meetings of the Board
of Directors and the committee thereof on which such director served during
fiscal 1998, except for Mr. Walther and Mr. Weiss.
DIRECTOR COMPENSATION
Our directors currently do not receive any compensation as such, but
directors who are not also our executive officers are reimbursed for expenses
incurred in connection with their service on the Board of Directors. We may
establish different compensation policies in the future. Under the terms of the
Stock Purchase Agreement between us and Vertical, Vertical currently receives a
monthly payment of $12,000 as compensation for the services of our Chairman of
the Board nominated by Vertical. Jacob Agam is the current nominee of Vertical.
During fiscal 1998, Vertical received $144,000 as consideration for Mr. Agam's
services as our Chairman of the Board. See "Certain Relationships and Related
Transactions -- Stock Purchase Agreement and Related Transactions."
EXECUTIVE COMPENSATION
The following summary compensation table sets forth the aggregate
compensation paid or accrued by us to Viktor Vogt, our Chief Executive Officer
until April 1998 and Jacob Agam, our Chief Executive Officer since April 1998,
one of our other executive officers whose annual compensation exceeded $100,000
for fiscal 1998 who was serving as an executive officer at December 31, 1998 and
two executive officers who were no longer serving in such capacity at December
31, 1998 for services rendered during the fiscal years ended December 31, 1998,
1997 and 1996:
9
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation(1) Long-Term Compensation
---------------------- ----------------------
Other Restricted Securities
Annual Stock Underlying All other
Name and Principal Year Salary Bonus Compensation Awards(s) Options(#) Compensation
Position ($) ($) ($) ($)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Jacob Agam(2)
Chairman and Chief
Executive Officer..... 1998 25,000 -- -- -- -- --
Viktor Vogt(3)
Co-Chairman, Chief
Executive Officer and
President............. 1998 70,655 -- 4,377(4) -- 75,000 --
2,336(5)
1997 136,458 10,000 16,965(4) -- -- --
9,387(5)
1996 120,833 -- 15,178(4) -- -- --
9,325(5)
Klaus Grissemann (6)
Chief Financial Officer 1998 144,845 -- 8,731(5) -- 50,000 --
25,000(9)
1997 142,083 -- 8,792(5) -- -- --
1996 136,163 -- 8,792(5) -- -- --
Franz Muller(7)
Chief Technical Officer
of IAT AG............. 1998 -- -- -- -- -- --
1997 95,632 -- 7,774(4) -- -- --
8,633(5)
1996 87,299 -- 7,729(4) -- -- --
8,633(5)
Alfred Simmet(8)
Chief Operating Officer
of FSE................ 1998 56,818 -- -- -- 25,000 --
1997 22,066 -- -- -- -- --
</TABLE>
- --------------
(1) Compensation is paid in Swiss Francs or German Deutsche Marks and is
converted into U.S. dollars at the exchange rate of $1.00 = 1.44 SF and
$1.00 = 1.775DM for 1996 and 1997 and $1.00 = 1.45 SF for 1998.
(2) Mr. Agam served as Co-Chairman of the Board since our organization in 1996
and became the sole Chairman and Chief Executive Officer in April 1998. For
1998, represents amounts accrued from September 1, 1998 to December 31,
1998, all of which was paid in 1999. Under an employment agreement
effective September 1,
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1998, Mr. Agam is entitled to an annual salary of $75,000 per year plus
certain other benefits. Excludes $123,000 and $144,000 paid to Vertical as
compensation for the services of Mr. Agam, as Chairman of the Board, during
1997 and 1998, respectively. See "-- Director Compensation" and "--
Employment Contracts and Termination of Employment and Change-In-Control
Arrangements."
(3) Dr. Vogt resigned as our Co-Chairman, President and Chief Executive Officer
as of April 1, 1998 in connection with our restructuring in March 1998.
Includes $36,000 paid to Dr. Vogt for services rendered in 1998 as a
consultant to IAT Multimedia. See "-- Employment Contracts and Termination
of Employment and Change-In-Control Arrangements" and "Certain
Relationships and Related Transactions -- Spinoffs."
(4) Pursuant to the pension system in existence in Switzerland, we contribute
these amounts to pension funds selected by the executive officer from among
several independent pension funds chartered by the government to collect
pension contributions and to make pension payments upon retirement.
(5) Represents payments made by us for automobile leases.
(6) Mr. Grissemann is not directly employed by IAT Multimedia. His services are
provided on a per diem basis by Grissemann Consulting S.A. See "--
Employment Contracts and Termination of Employment and Change-In-Control
Arrangements."
(7) Mr. Muller served as the Chief Technical Officer of IAT AG until March 1998
when he resigned from his position with IAT AG. Salary accrued from January
1, 1998 through March 31, 1998 was assumed by Algo Vision Schweiz in
connection with our restructuring in March 1998. See "-- Employment
Contracts and Termination of Employment and Change-In-Control Arrangements"
and "Certain Relationships and Related Transactions -- Spinoffs."
(8) Dr. Simmet became the Chief Operating Officer of FSE Computer-Handel GmbH &
Co. on November 13, 1997 in connection with our acquisition of FSE. Dr.
Simmet waived his rights to a portion of his salary during 1998. Dr.
Simmet's compensation in 1997 represents amounts accrued from November 13,
1997 to December 31, 1997, all of which was paid in 1997. Dr. Simmet
resigned as the Chief Operating Officer of FSE effective December 31, 1998.
See "-- Employment Contracts and Termination of Employment and
Change-In-Control Arrangements" and "Certain Relationships and Related
Transactions -- Simmet Purchase Agreement."
(9) Consists of a payment to Mr. Grissemann for services rendered in connection
with the acquisition of Columbus Computer Handels-und Vertriebs. See "--
Employment Contracts and Termination of Employment and Change In-Control
Arrangements."
11
<PAGE>
OPTION GRANTS IN THE LAST FISCAL YEAR
The following table sets forth certain information regarding stock options
granted to our named executive officers during the fiscal year ended December
31, 1998. No stock appreciation rights were granted to these individuals during
such year.
<TABLE>
<CAPTION>
Individual Grants
------------------------------------------------
Percent of
Total Potential Realizable
Number of Options Value at Assumed
Securities Granted to Exercise Annual Rates of
Underlying Employees or Base Stock Price
Options in Fiscal Price Expiration Appreciation For
Name Granted (#) Year ($/Sh) Date Option Term(1)
- -------------------------------------------------------------------------------------------------
5% ($) 10% ($)
------ -------
<S> <C> <C> <C> <C> <C> <C>
Jacob Agam -- -- -- -- -- --
Victor Vogt (2) 50,000(3) 28.6 $5.00 3/11/03 69,070 152,628
25,000(4) 14.3 $6.00 4/16/03 41,442 91,577
Klaus Grissemann 50,000(5) 28.6 $6.00 4/16/08 188,668 478,123
Franz Muller (6) -- -- -- -- -- --
Alfred Simmet (7) 25,000(5) 14.3 $6.00 4/16/03 94,334 239,061
</TABLE>
(1) Calculated by multiplying the exercise price by the annual appreciation
rate shown (as prescribed by the SEC rules) and compounded for the term of
the options, subtracting the exercise price per share and multiplying the
gain per share by the number of shares covered by the options. These
amounts are not intended to forecast possible future appreciation, if any,
of the price of our common stock. The actual value realized upon exercise
of the options will depend on the fair market value of our common stock on
the date of exercise.
(2) Dr. Vogt resigned as an executive officer of IAT Multimedia effective April
1, 1998. See "-- Employment Contracts and Termination of Employment and
Change-In-Control Arrangements."
(3) The options are exercisable in equal annual installments of one-third on a
cumulative basis commencing from the date of grant.
(4) The options are all exercisable in full commencing from the date of grant.
(5) The options are exercisable in equal annual installments of 50% on a
cumulative basis commencing from the date of grant.
(6) Mr. Muller resigned as an executive officer of IAT Multimedia effective
April 1, 1998. See "--Employment Contracts and Termination of Employment
and Change-In-Control Arrangements."
(7) Dr. Simmet resigned as an executive officer of IAT Multimedia effective
December 31, 1998 and as a result these options have terminated. See "--
Employment Contracts and Termination of Employment and Change-In-Control
Arrangements."
12
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
The following table sets forth certain information with respect to the
exercise of stock options during fiscal 1998 by our named executive officers and
the number and value of unexercised options held by each of our named executive
officers as of December 31, 1998:
<TABLE>
<CAPTION>
Number of Securities
Shares Underlying Unexercised Value of Unexercised
Acquired Value Options at In-the-Money Options at
Name on Exercise (#) Realized($) Fiscal Year-End (#) Fiscal Year-End ($)(1)
- ---- --------------- ----------- ------------------- ----------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Jacob Agam -- -- -- -- -- --
Victor Vogt (2) -- -- 41,666 33,334 -- --
Klaus Grissemann -- -- 25,000 25,000 -- --
Franz Muller (3) -- -- -- -- -- --
Alfred Simmet (4) -- -- 12,500 12,500 -- --
</TABLE>
- -----------------
(1) None of the options outstanding at December 31, 1998 were exercisable at
below $4.25, the market price of our common stock December 31, 1998.
(2) Dr. Vogt resigned as an executive officer of IAT Multimedia effective April
1, 1998. Dr. Vogt is currently a director and consultant to IAT Multimedia,
but has elected not to stand for re-election to the Board of Directors. As
a result, his options have not yet terminated. See "-- Employment Contracts
and Termination of Employment and Change-In-Control Arrangements" and
"Certain Relationships and Related Transactions - Algo Vision Transaction."
(3) Mr. Muller resigned as an executive officer of IAT Multimedia effective
April 1, 1998. See "--Employment Contracts and Termination of Employment
and Change-In-Control Arrangements."
(4) Dr. Simmet resigned as an executive officer of IAT Multimedia effective
December 31, 1998 and as a result these options have terminated. See "--
Employment Contracts and Termination of Employment and Change-In-Control
Arrangements."
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT
AND CHANGE-IN-CONTROL ARRANGEMENTS
MR. AGAM
We entered into an employment agreement effective as of September 1, 1998
with Mr. Agam under which Mr. Agam has agreed to serve as our Chief Executive
Officer for a three year term expiring September 1, 2001. Under the employment
agreement, Mr. Agam is entitled to an annual salary of $75,000 per year, plus a
bonus to be approved by the Board of Directors. If the employment agreement is
terminated by us without cause, Mr. Agam is entitled to receive his base salary
for a period of one year following the date of termination.
13
<PAGE>
DR. VOGT
We entered into an employment agreement effective as of March 1, 1997 with
Dr. Vogt (which, as noted below, terminated as of April1, 1998) and governed by
Swiss law under which Dr. Vogt agreed to serve as our Co-Chairman, Chief
Executive Officer and President originally for a three year term subject to
extension. The employment agreement provided that Dr. Vogt was to receive
approximately $140,000 in annual salary (based upon a fixed exchange rate of SF
1.35 = $1.00), a non-accountable expense allowance of approximately $8,333 (SF
12,000) and pension fund contributions, as well as a cash bonus in the amount of
one half of one percent of our net sales in excess of $5.0 million provided that
such cash bonus would not be less than $10,000, and other customary fringe
benefits. In addition, Dr. Vogt was eligible to receive stock options for a
number of shares of our common stock to be determined by the Board of Directors.
The employment agreement with Dr. Vogt also contained a provision prohibiting
Dr. Vogt from competing with us for a period of two years from the date of
expiration of his employment. During the two year non-competition period, we
would be required to compensate Dr. Vogt for the difference between his salary
during the year prior to commencement of the non-competition period and any
compensation he may receive from a third party during such period, if any, and
to make payments of pension fund contributions on such compensation. In the
event we subsequently waived our rights under the non-competition provision, no
compensation would be due to Dr. Vogt upon termination. The employment agreement
provided that during its three-year term each party may only terminate the
employment agreement for gross misconduct of the other party without notice.
However, Dr. Vogt could be relieved by us of his functions and duties at any
time provided that all compensation continues to be paid until the expiration of
the employment agreement.
In connection with our reorganization in March 1998, Dr. Vogt resigned from
his positions as our Co-Chairman, Chief Executive Officer and President and from
management positions in our subsidiaries and the employment agreement described
above terminated as of April 1, 1998. Dr. Vogt currently serves as a director,
but as a result of his position as Chairman of the Board and Chief Executive
Officer of Algo Vision plc, will not stand for re-election to the Board of
Directors. In April 1998, we entered into a three-year consulting contract with
Dr. Vogt under which Dr. Vogt agreed to provide us with his services with
respect to (i) evaluation and analysis of technology issues, (ii)
identification, evaluation and integration of acquisitions for us and (iii) such
other matters as the Board of Directors may request and to which Dr. Vogt may
agree. In connection with such consulting agreement, Dr. Vogt is entitled to
receive $2,000 per month plus reimbursement of his reasonable expenses. No other
compensation is due to Dr. Vogt under the terminated employment agreement. In
March 1998, Dr. Vogt entered into a consulting agreement with FSE, one of our
subsidiaries, to participate in the integration of FSE with us for which FSE
will pay Dr. Vogt $2,000 per month, plus reimbursement of reasonable expenses,
for such services. In March 1998, Dr. Vogt received options to purchase 50,000
shares of our common stock in connection with our reorganization in March 1998.
See "Certain Relationships and Related Transactions -- Spinoffs" and "-- Algo
Vision Transaction."
MR. GRISSEMANN
Mr. Grissemann's services as our Chief Financial Officer are provided to us
on a per diem basis by Grissemann Consulting S.A. pursuant to an agreement,
dated September 1, 1992, and amended on December 19, 1994, between IAT AG and
Grissemann Consulting S.A. This agreement has an indefinite term and provides
that Mr. Grissemann is responsible for the administration and accounting of IAT
Multimedia and that the amount of his business time which he is to devote to our
affairs is to be agreed among the parties but shall not be less than 30% of Mr.
Grissemann's business time. Grissemann Consulting S.A. is paid a fee of
approximately $538 (SF775) per day to be amended yearly in line with increases
in salary of our other executive officers plus expenses of an automobile to be
provided to Mr. Grissemann. In July 1998, we further amended the agreement to
provide for a payment to Mr. Grissemann for services provided by him in
connection with our acquisitions or financings. The amount to be paid to Mr.
Grissemann for such services in any year will not exceed $50,000. In 1998, we
paid $25,000 to Mr. Grissemann for services provided in connection with our
acquisition of Columbus.
14
<PAGE>
MR. MULLER
Franz Muller and IAT AG entered into an employment agreement on March 1,
1991 under which Mr. Muller was appointed Director of Product Development
(Hardware), Technical Support of IAT AG. The Agreement had an indefinite term
and provided for a base annual salary of approximately $81,500 (SF110,110),
subject to increases in our discretion, which have been made from time to time,
and could be terminated by either party upon six months notice at the end of the
calendar year. In addition, the agreement contained a confidentiality provision
which extends beyond termination of the employment relationship. The agreement
was amended effective as of July 1, 1993 to provide that Mr. Muller assign to
IAT AG any and all rights to work and computer programs which he developed
singly or in cooperation with others during the performance of his duties. In
connection with our reorganization in March 1998, our rights and obligations
under the agreement were transferred to Algo Vision Schweiz. See "Certain
Relationships and Related Transactions -- Spinoffs."
DR. SIMMET
On November 12, 1997, FSE entered into an employment agreement with Dr.
Alfred Simmet pursuant to which Dr. Simmet served as the Chief Operating Officer
of FSE. Dr. Simmet was entitled to a gross monthly salary of approximately
$14,085 (DM 25,000), and reimbursement for travel, other business-related
expenses and expenses of an automobile provided to Dr. Simmet. The employment
agreement also provided that, in the event Dr. Simmet was temporarily prevented
from performing his managerial duties through no fault of his own, FSE would pay
his full salary for up to a period of six months. The employment agreement was
for a term of two years and could be terminated by either party upon six months
notice, effective at the end of the calendar year. Dr. Simmet resigned as the
Chief Operating Officer of FSE effective December 31, 1998. Dr. Simmet is
subject to a non-competition clause which prohibits Dr. Simmet from either
directly or indirectly competing with us and FSE's current operations in those
territories in which we and FSE are currently active until December 31, 2001.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
our directors and officers and persons who own more than 10% of a class of our
equity securities which are registered under the Exchange Act to file with the
SEC initial reports of ownership and reports of changes of ownership of such
registered securities. To our knowledge, based solely on a review of the copies
of such reports furnished to us and on representations that no other reports
were required, no person required to file such a report failed to file on a
timely basis during fiscal 1998, except that a report on Form 5 reporting the
sale in May 1998 of shares of our common stock by Volker Walther, a director of
IAT Multimedia, was filed by Mr. Walther in February 1999 and a report of Form 3
reporting the election of each of Erich Weber and Robert Weiss to our Board of
Directors in June 1998 was filed by each of Dr. Weber and Mr. Weiss in September
1998.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended December 31, 1998, our Compensation Committee
consisted of Messrs. Walther, Grissemann, Weber and Weiss, none of whom is a
current or former employee or officer of IAT Multimedia or any of our
subsidiaries, except Mr. Grissemann who, while not our employee, provides the
services of a Chief Financial Officer and is indirectly compensated by us. See
"-- Employment Contracts and Termination of Employment and Change-In-Control
Arrangements."
BOARD OF DIRECTORS REPORT ON EXECUTIVE COMPENSATION(1)
The goal of the our executive compensation policy is to ensure that an
appropriate relationship exists between executive compensation and the creation
of stockholder value, while at the same time attracting, motivating and
retaining executive officers. During fiscal 1998, the Board of Directors
reviewed matters relating to executive
15
<PAGE>
compensation. The Board of Directors informal executive compensation philosophy
(which applies generally to all of our executive officers) considers a number of
factors, which may include:
o providing levels of compensation competitive with companies in comparable
industries which are at a similar stage of development and in our
geographic area;
o integrating the compensation of our executive officers with the achievement
of performance goals;
o rewarding above average corporate performance; and
o recognizing and providing incentive for individual initiative and
achievement.
During fiscal 1998, all of our executive officers, including Viktor Vogt,
our Chief Executive Officer until April 1998, and Jacob Agam, our Chief
Executive Officer since April 1998, received salaries based upon their
employment agreements with us. Compensation structures for our executive
officers generally include a salary, bonus, options and fringe benefits.
The compensation received during fiscal 1998 by Viktor Vogt and Jacob Agam
was governed by employment agreements entered into in March 1997 and September
1998, respectively, and substantially in accordance with the policies described
above relating to all executive officers. The Board of Directors considered
Viktor Vogt's and Jacob Agam's efforts and performance necessary to achieve
specified objective criteria, as described above.
TAX DEDUCTIBILITY OF COMPENSATION
Section 162(m) of the Internal Revenue Code of 1986, as amended, limits our
ability to deduct for tax purposes compensation over $1,000,000 to any of the
named executive officers unless, in general, the compensation is paid pursuant
to a plan which is performance related, non-discretionary and has been approved
by our stockholders. We should not incur compensation during fiscal 1998 to any
named executive officer in excess of $1,000,000.
Jacob Agam
Klaus Grissemann
Viktor Vogt
Franz Muller
Alfred Simmet
- -------------
(1) The material in this report is not soliciting material, is not deemed filed
with the SEC and is not incorporated by reference in any filing of
IAT Multimedia, Inc. under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, whether made before or after
date of this proxy statement and irrespective of any general incorporation
language in such filing.
16
<PAGE>
STOCK PRICE PERFORMANCE PRESENTATION
The following chart compares the cumulative total stockholder return on
our shares of common stock with the cumulative total stockholder return of (i)
the Nasdaq Market Index, (ii) a new peer group index and (iii) an old peer group
index. During 1998, we changed our peer group index to reflect the
reorganization of our business, under which we transferred substantially all of
the assets and liabilities related to our visual communications technology
business to an entity in which we own a minority interest and focused our
business on the sale and distribution of personal computers, components,
peripherals and software. The old peer group consists of Analog Devices, Inc.,
Imaging Technologies Corporation, Picturetel Corporation, Techdyne, Inc.,
VideoServer, Inc., Vtel Corporation and White Pines Software, Inc. The new peer
group consists of Bitwise Designs, Inc., Paravant, Inc., Miltope Group, Inc.,
Tridex Corporation, Rimage Corporation, ATEC Group, Inc., Kentek Information
Systems, Inc. and Datametrics Corp.
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG IAT MULTIMEDIA, INC.,
NASDAQ MARKET INDEX, NEW PEER GROUP INDEX AND OLD PEER GROUP
INDEX (1)
<TABLE>
<CAPTION>
FISCAL YEAR ENDING
--------------------------------------------------------------
COMPANY/INDEX/MARKET 3/26/97 3/31/97 6/30/97 9/30/97 12/31/97 3/31/98
<S> <C> <C> <C> <C> <C> <C>
IAT Multimedia, Inc. 100.00 97.14 68.57 74.29 71.79 51.43
Old Peer Group 100.00 92.79 101.40 126.34 103.57 120.97
New Peer Group 100.00 99.94 91.66 124.20 104.25 112.99
NASDAQ Market Index 100.00 100.00 118.30 137.93 129.24 151.47
<CAPTION>
FISCAL YEAR ENDING
--------------------------------------------------------------
COMPANY/INDEX/MARKET 6/30/98 9/30/98 12/31/98
<S> <C> <C> <C>
IAT Multimedia, Inc. 115.71 58.57 48.57
Old Peer Group 94.09 62.41 114.42
New Peer Group 114.41 79.96 102.18
NASDAQ Market Index 155.38 140.04 182.05
</TABLE>
(1) Assumes $100 invested on March 26, 1997 and assumes dividends reinvested.
The shares of our common stock began trading on the Nasdaq National Market
on March 26, 1997. Measurement points are on March 26 and on the last
trading day of each quarter during the fiscal years ended December 31, 1997
and 1998. The material in this chart is not soliciting material, is not
deemed filed with the SEC and is not incorporated by reference in any of
our filings under the 1933 Act or the 1934 Act, whether made before or
after the date of this proxy statement and irrespective of any general
incorporation language in such filing.
17
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
All amounts in U.S. dollars were converted based on the exchange rate in
effect at the time of the respective transaction.
STOCKHOLDER LOANS AND GUARANTEES
On November 6, 1996, Klaus-Dirk Sippel made an unsecured subordinated loan
to IAT AG in the amount of SF 650,000 (approximately $481,500). A portion of
this loan was used by IAT AG to repay an unsecured non-interest bearing loan in
the amount of SF 150,000 (approximately $111,000) made in February 1996 to IAT
AG by Telefutura, a company controlled by Mr. Sippel. The loan by Mr. Sippel to
IAT AG had an annual interest rate of 8% and principal and accrued interest was
repaid in February 1998.
On December 19, 1995, HIBEG, the then 25.1% shareholder of IAT Germany,
made an unsecured subordinated loan to IAT Germany in the amount of
approximately DM 500,000 (approximately $321,467) which was increased in June
1996 to DM 750,000 (approximately $482,200). The loan accrued interest at 5% per
annum payable semi-annually and the interest rate was to be increased to 10% per
annum during the year when the retained earnings of IAT Germany exceeded DM
87,500 (approximately $56,300). IAT Germany was required to make semi-annual
payments of 10% of the principal starting on June 30, 2000 until the principal
was repaid in full. This loan was assumed by Algo Vision Systems in our
reorganization in March 1998. See "-- Spinoffs."
Mr. Sippel and Richard Suter, each a principal stockholder of IAT
Multimedia, jointly and severally guaranteed two bank loans from Swiss Bank
Corporation to IAT AG each in the amount of SF 600,000 (approximately $444,400)
prior to our organization in September 1996. Each of Messrs. Sippel, Suter and
Cornelius Holthuizen, a stockholder of IAT Multimedia, jointly and severally
guaranteed a bank loan from Swiss Bank Corporation to IAT AG in the amount of SF
700,000 (approximately $518,500) under IAT AG's credit agreement with Swiss Bank
Corporation for an aggregate of SF 1,900,000 (approximately $1.4 million). IAT
AG's line of credit with the Swiss Bank Corporation was reduced to the aggregate
principal amount of SF 1,300,000 (approximately $900,000), and we agreed with
Swiss Bank Corporation to repay IAT AG's credit line in monthly installments of
approximately $140,000, the first installment of which was made on October 31,
1997. In connection with the agreement between us and Swiss Bank Corporation
pursuant to which we agreed to repay IAT AG's credit line installments, we were
assigned the rights of Swiss Bank Corporation under the guarantees of Messrs.
Sippel, Suter and Holthuizen. Under an agreement dated as of December 22, 1997
between us and Messrs. Sippel, Suter and Holthuizen, Messrs. Sippel, Suter and
Holthuizen sold 50,000, 50,000 and 20,000 shares of our common stock,
respectively, in March 1998 and we received approximately $494,000 from the
proceeds of such sales which was used to repay the credit line with Swiss Bank
Corporation. As a result, the guarantees of Messrs. Sippel, Suter and Holthuizen
were released.
IAT Germany obtained a line of credit from Volksbank Sottrum in January
1996 in the amount of DM 1,050,000 (approximately $675,000). IAT AG, HIBEG and
Dr. Vogt each guaranteed DM 350,000 (approximately $225,000) of this line of
credit. Amounts outstanding under this line of credit were assumed by Algo
Vision Systems in our reorganization in March 1998. See "-- Spinoffs."
STOCK PURCHASE AGREEMENT AND RELATED TRANSACTIONS
Under a stock purchase agreement among us, IAT AG, IAT Germany and Vertical
dated October 4, 1996, we sold an aggregate of 1,875,000 shares of Series A
preferred stock and warrants to purchase 1,875,000 shares of our common stock to
Vertical, Behala Anstalt, Lupin Investments Services Ltd., Henilia Financial
Ltd. and Avi Suriel for an aggregate purchase price of $1.5 million or $.80 per
share of our Series A preferred stock (attributing no value to the warrants).
18
<PAGE>
Upon consummation of our initial public offering in April 1997 all
outstanding shares of the Series A preferred stock were converted into shares of
common stock.
The Stock Purchase Agreement further provides that until October 24, 1999
we shall pay to Vertical monthly compensation of $12,000 for the services of our
Chairman of the Board nominated by Vertical. Jacob Agam is the current nominee
of Vertical. During fiscal 1998, Vertical received $144,000 as full compensation
for the services of Mr. Agam, our Chairman of the Board. We also agreed that,
for so long as Vertical shall hold the common stock issued upon conversion of
its Series A preferred stock or upon exercise of the warrants held by Vertical,
the composition of the Board of Directors of IAT AG and IAT Germany shall be
identical to the composition of our Board of Directors and shall not be changed
without Vertical's consent; provided that, consent shall not be withheld if
required to comply with Swiss law.
We further agreed in the Stock Purchase Agreement that we will cause IAT
AG and IAT Germany not to issue, and will not permit the issuance of, any shares
of capital stock (or any security convertible into shares of capital stock) of
IAT AG or IAT Germany, it being the intention of us and Vertical that IAT AG
shall remain our direct or indirect wholly-owned subsidiary and IAT Germany
shall remain our direct or indirect subsidiary.
Amendment No. 1 to the Stock Purchase Agreement, effective as of
December19, 1997, provides that Vertical shall not enter into an agreement or
make any investment in an entity engaged in the video conferencing business
without first providing us the opportunity to enter into such agreement or make
such investment instead of Vertical.
In connection with the Stock Purchase Agreement, we also entered into an
investor rights agreement with Vertical which provides that Vertical has the
right to nominate as a member of the management slate for election to the Board
of Directors one or two persons for so long as Vertical holds at least 5% or
10%, respectively, of the 1,875,000 shares of common stock issued by us upon
conversion of our Series A preferred stock in April 1997 or the 1,875,000 shares
of common stock issuable upon exercise of the warrants. As of April 29, 1999,
Vertical held 850,152 of such shares of common stock and held warrants to
purchase 690,152 shares of common stock. We agreed that one such person shall be
elected Chairman of the Board of Directors. Vertical has nominated Jacob Agam
and Marc Goldfarb as directors, and Vertical nominated and Mr. Agam was elected
as our Chairman of the Board. The Investor Rights Agreement further provides for
one demand and two piggy-back registration rights for the shares of common stock
held by Vertical and issuable upon exercise of warrants held by Vertical.
Vertical exercised such demand for its common stock in February 1999 and we
registered for resale shares of our common stock held by Vertical and certain
other stockholders.
We also entered into a marketing agreement with General Capital, an
affiliate of Vertical. The Marketing Agreement provides that General Capital
will assist us in connection with marketing our products worldwide, arranging
debt or equity financing for our products to be purchased by our customers, and
arranging financing for our operations, leasing programs, joint ventures and
distribution arrangements, in each case for the further enhancement of our
marketing strategy. The Marketing Agreement has a five year term expiring on
October 26, 2001. Under the Marketing Agreement, we paid $100,000 in October
1996 and the remaining $400,000 was paid with a portion of the proceeds of our
initial public offering in April 1997.
ESCROW SHARES
Prior to our initial public offering our then stockholders deposited an
aggregate of 498,285 shares of common stock into escrow in connection with our
initial public offering. The escrow shares are not assignable or transferable.
All of the escrow shares shall be released if, for the fiscal year ending
December31, 1999, our minimum revenues equal or exceed $12.0 million and our
income before provision for taxes equal or exceeds $1.0 million. All of the
escrow shares will also be released from escrow if one or more of the following
remaining conditions is met:
o the average of the closing bid prices of our common stock for any 30
consecutive trading days
19
<PAGE>
commencing March 26, 1999 exceeds $13.00 per share; or
o we are acquired by or merged into another entity commencing March 26,
1999 in a transaction in which the value of the per share
consideration received by our stockholders (after giving effect to the
release of shares from escrow) on the date of such transaction exceeds
$13.00 per share.
The minimum revenues and minimum income amounts set forth above shall be:
o derived solely from the business owned and operated by us at the time
of our initial public offering and shall not give effect to any
operations relating to businesses or assets acquired after April 1,
1997;
o calculated exclusive of any extraordinary earnings including, but not
limited to, any charge to income resulting from the release of the
escrow shares; and
o audited by our independent public accountants.
Any money, securities, rights or property distributed in respect of the
escrow shares shall be received by the escrow agent, including any property
distributed as dividends or pursuant to any stock split, merger,
recapitalization, dissolution or total or partial liquidation of IAT Multimedia.
On March31, 2000, any remaining escrow shares, as well as any dividends or other
distributions made with respect thereto, will be canceled and contributed to our
capital. We expect that the release of the escrow shares to our officers,
directors, employees and consultants will be deemed compensatory and,
accordingly, will result in a substantial charge to operations, which would
equal the then fair market value of such shares. Such charges could
substantially increase the loss or reduce or eliminate our net income for
financial reporting purposes for the period during which such shares are, or
become probable of being, released from escrow. Although the amount of
compensation expense recognized by us will not affect our total stockholders'
equity, it may have a negative effect on the market price of our common stock.
The minimum revenues and minimum income amounts and closing bid price
levels set forth above were determined by negotiation between us and the
underwriters in our initial public offering and should not be construed to imply
or predict any future earnings by us or any increase in the market price of our
common stock.
SIMMET PURCHASE AGREEMENT
In November 1997, we purchased 100% of the capital stock of the general
partner of FSE and 80% of the limited liability company shares of FSE for an
aggregate purchase price of approximately $3.7 million, of which approximately
$2.8 million was paid in cash and approximately $900,000 was paid in shares of
our common stock. Dr. Simmet retained a 20% ownership interest in FSE. Pursuant
to the provisions of the transaction documents, Dr. Simmet had the right, under
certain circumstances, to receive from us an aggregate amount of approximately
$1,000,000, which amount represents the retained earnings of FSE prior to the
acquisition of FSE by us. During 1998, Dr. Simmet received approximately
$150,000 of such amount. Dr. Simmet resigned as an officer of FSE effective
December 31, 1998 and, as a result, the remaining approximately $850,000 owed to
Dr. Simmet by us was applied to reduce the amounts owed by Dr. Simmet to us
under the guarantee discussed below. During 1998, Dr. Simmet elected not to
receive a portion of his salary from FSE.
In connection the FSE acquisition, Dr. Simmet guaranteed to refund a
portion of the purchase price paid by us for FSE if the earnings before
interest, income taxes, depreciation and amortization (EBITDA) of FSE for the
fiscal year ended December 31, 1998 did not reach certain targets. The EBITDA of
FSE for the fiscal year ended December 31, 1998 did not reach such targets and,
as a result, Dr. Simmet owed us approximately $1.5 million. In February 1999, we
entered into a purchase agreement with Dr. Simmet under which Dr. Simmet agreed
to pay us the $1.5 million and we agreed to purchase Dr. Simmet's remaining 20%
interest in FSE by December 31, 2000. The $1.5million owed to us by Dr. Simmet
was reduced by $920,000, which represented the remainder of the retained
earnings of FSE owed to Dr. Simmet by us, as discussed above, and pension
contributions owed to Dr. Simmet. The remaining approximately $580,000 is owed
by Dr. Simmet to us and will be credited towards the purchase price for the FSE
shares which we agreed to purchase from Dr. Simmet. The purchase price for a
portion of the FSE shares,
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which we have agreed to purchase as of either December 31, 1999 or December 31,
2000, will be based upon the operating results of FSE for the fiscal year ending
December 31, 1999 and the purchase price for the remaining shares of FSE, which
we have agreed to purchase as of December 31, 2000 will be based upon the
operating results of FSE for the fiscal year ending December 31, 2000. If the
purchase price for the FSE shares is less than $580,000 then Dr. Simmet will pay
us the difference between $580,000 and the purchase price for the FSE shares. If
the purchase price for the FSE shares is greater than $580,000 then we will pay
Dr. Simmet the difference between the purchase price for the FSE shares and
$580,000.
SPINOFFS
German Restructuring. In March 1998, we transferred the business and
substantially all of the assets and the liabilities (other than intercompany
accounts) of one of our majority-owned German subsidiaries, IAT Germany, to a
newly formed German company, Algo Vision Systems. IAT Germany had provided our
research and development and was responsible for sales and marketing in Germany
of our visual communications technology. The transfer was given economic effect
at January 1, 1998. We acquired a 15% interest in Algo Vision Systems, which
interest was exchanged in July 1999 for shares of capital stock of Algo Vision
plc, an English company whose shares trade on the European Association of
Securities Dealers Automated Quotation System (EASDAQ) and the parent company of
Algo Vision Systems and Algo Vision Schweiz. See "--Algo Vision Transaction."
In connection with the restructuring, HIBEG transferred all of its
approximately 25% interest in IAT Germany to IAT AG for a purchase price of DM
175,700 (approximately $100,000), and IAT Germany became a wholly-owned
subsidiary of IAT AG.
In connection with this transaction, we contributed approximately $650,000
to Algo Vision Systems, which represented the excess of the book value of the
assumed liabilities over the assets transferred. We also provided Algo Vision
Systems with a working capital loan of approximately $300,000, of which $160,000
plus interest was repaid in 1998 and the remaining $140,000 plus interest was
repaid in April 1999. Algo Vision Systems assumed substantially all of the
liabilities of IAT Germany (other than intercompany amounts). IAT Germany
represented and warranted that the liabilities assumed by Algo Vision Systems
were not to be more than the assets transferred to Algo Vision Systems and IAT
Germany agreed to pay Algo Vision Systems an amount equal to the nominal value
of such additional shortfall. We have no further obligation to make future
contributions to Algo Vision Systems.
Algo Vision Systems also assumed all rights and obligations under a credit
agreement dated December 19, 1995 between HIBEG, as creditor, and IAT Germany,
as debtor, relating to a loan in the aggregate principal amount of DM 750,000
(approximately US $430,000).
IAT Germany agreed not to compete for a period of five years with the
present core business of Algo Vision Systems (systems, system kits and software
system solutions for visual communications) within Germany.
Swiss Restructuring. In March 1998, we also transferred the business and
certain of the assets and liabilities of IAT AG, other than, among others, our
intellectual property and the ownership interests in IAT Germany, to Algo Vision
Schweiz, a newly formed Swiss corporation. The transfer was given economic
effect at January 1, 1998. We acquired a 15% interest in Algo Vision Schweiz,
which interest was exchanged for shares of capital stock of Algo Vision, plc in
July 1999.
Algo Vision Schweiz gave IAT AG a three year note, denominated in U.S.
Dollars, with an aggregate principal amount equal to the book value of the
transferred assets less the book value of the assumed liabilities as of January
1, 1998 plus the pro-rata portion of any prepaid expenses and any portion of the
liabilities assumed by Algo Vision Schweiz which were paid by IAT AG prior to
the closing date of the transaction. The note has an aggregate principal amount
of approximately $325,000, which will be reduced by the amount of certain
expenses of IAT AG to be paid by Algo Vision Schweiz. The note bears interest at
the rate of 3% per annum, payable semi-annually on March 1 and September 1
commencing September 1, 1998. The note is payable in March 2001. The note may be
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pre-paid at any time without penalty. In connection with the transaction with
Algo Vision plc, Algo Vision Schweiz repaid the note. See "--Algo Vision
Transaction."
We loaned Algo Vision Schweiz $250,000 which is evidenced by a note from
Algo Vision Schweiz. This note bears interest at the rate of 3% per annum,
payable semi-annually on March 1 and September 1 commencing September 1, 1998.
The note is payable upon certain events, but no later than March 2001. In
connection with the transaction with Algo Vision plc, Algo Vision Schweiz repaid
the note. We have no further obligation to make future contributions to Algo
Vision Schweiz. See "--Algo Vision Transaction."
At the time of the spin-off transaction, an entity controlled by Dr. Viktor
Vogt, one of our directors and an officer and a principal stockholder of Algo
Vision plc, loaned Algo Vision Schweiz $250,000. The loan bears interest at the
rate of 3% per annum, payable semi-annually on March 1 and September 1
commencing September 1, 1998. The loan is payable on the third anniversary of
the closing date of the transaction. The loan may be pre-paid at any time
without penalty; provided, however, that the loan may not be paid prior to the
time that the loans by us to Algo Vision Schweiz are paid in full. The loan by
Dr. Vogt to Algo Vision Schweiz is subordinated to the loans made by us to Algo
Vision Schweiz.
In connection with the restructuring, we maintained our ownership of all
intellectual property developed for our visual communications products but
granted Algo Vision Schweiz a non-exclusive five-year license to use our
intellectual property for multimedia and compression/decompression applications.
Algo Vision Schweiz has the right to grant sublicenses to Algo Vision Systems
and other affiliates. In most cases, the royalty varies between 10% and 20% of
the sales price of the software sold. Algo Vision Schweiz was granted a
five-year option to purchase a 50% co-ownership of our intellectual property for
$1 million. Upon the exercise of such option, the royalty paid by Algo Vision
Schweiz to us would be cut in half and we would pay Algo Vision Schweiz half of
the royalties received by us from third-parties. In addition, after exercise of
the option, Algo Vision Schweiz can grant sub-licenses to third-parties or
transfer the license or co-ownership interest. In July 1999, the option was
transferred to and exercised by Algo Vision plc. See "--Algo Vision
Transaction."
In connection with our restructuring, Dr. Vogt resigned from his positions
as our Co-Chairman of the Board, Chief Executive Officer and President and from
management positions in our subsidiaries, but remained a director and consultant
of IAT Multimedia.
ALGO VISION TRANSACTION
In July 1999, Algo Vision plc exercised its option to purchase an ownership
interest in our intellectual property and, as a result, we entered into a series
of agreements related to (i) the sale of our visual communications intellectual
property rights (other than the IAT name or mark) and (ii) the exchange of our
15% equity interest in each of Algo Vision Systems and Algo Vision Schweiz, for
shares of capital stock of Algo Vision plc. Dr. Vogt, one of our current
directors, owns approximately 26.2% of the outstanding shares Algo Vision plc.
Dr. Vogt also serves as the Chairman of the Board and Chief Executive Officer of
Algo Vision plc, and, as a result of these positions, Dr. Vogt will not stand
for re-election to the Board of Directors.
Under the terms of the agreements, Algo Vision plc purchased a 50% interest
in our visual communications intellectual property rights for $1,000,000 in July
1999, and purchased the remaining 50% interest for an additional $2,500,000 in
August 1999. Algo Vision plc has agreed to pay us royalties (ranging from 5% to
10%) on the sale of certain products utilizing the visual communications
technology purchased by them until August 2001. In connection with the
transaction, Algo Vision Schweiz repaid outstanding loans aggregating
approximately $500,000 made by us to Algo Vision Schweiz as part of the
spin-offs.
In July 1999, we also exchanged our 15% interest in each of Algo Vision
Systems and Algo Vision Schweiz for 500,000 shares of Algo Vision plc (valued at
$5,000,000 at EASDAQ admission). These shares are subject to a lock-up agreement
for a period of six months, subject to certain exceptions. In August 1999, as
part of the
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transaction, we also purchased an additional 250,000 shares of Algo Vision plc
for a purchase price of $2,500,000, of which 200,000 shares will be subject to a
lock-up agreement for a period of three months, subject to certain exceptions.
LEASE
We sublease a portion of approximately 4,600 square feet of office space in
New York, New York from an affiliate of our Chairman of the Board and Chief
Executive Officer. This lease terminates in January 2002 and has annual rental
cost of $100,000, which amount includes administrative and office services.
EMPLOYMENT AGREEMENTS
We have entered into employment agreements with each of our executive
officers and have granted options to certain of our executive officers. See
"Executive Compensation -- Employment Contracts and Termination of Employment
and Change-in-Control Arrangements."
APPROVAL AND RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS
Our management recommends a vote for the approval and ratification of the
appointment of Rothstein, Kass & Company, P.C. as our independent auditors for
the fiscal year ending December 31, 1999. Rothstein, Kass & Company, P.C. has
been our auditors for the past fiscal year and has no direct or indirect
financial interest in IAT Multimedia. A representative of Rothstein, Kass &
Company, P.C. is expected to be present at the Annual Meeting of Stockholders
with the opportunity to make a statement if he or she desires to do so, and
shall be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPOINTMENT OF ROTHSTEIN,
KASS & COMPANY, P.C., AS OUR INDEPENDENT AUDITORS, AND THE PERSONS NAMED IN THE
ACCOMPANYING PROXY WILL VOTE IN ACCORDANCE WITH THE CHOICE SPECIFIED THEREON OR,
IF NO CHOICE IS PROPERLY INDICATED, IN FAVOR OF THE APPOINTMENT OF ROTHSTEIN,
KASS & COMPANY, P.C. AS OUR INDEPENDENT AUDITORS.
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GENERAL
Our management does not know of any matters other than those stated in this
Proxy Statement which are to be presented for action at the meeting. If any
other matters should properly come before the meeting, it is intended that
proxies in the accompanying form will be voted on any such other matters in
accordance with the judgment of the persons voting such proxies. Discretionary
authority to vote on such matters is conferred by such proxies upon the persons
voting them.
We will bear the cost of preparing, printing, assembling and mailing the
proxy, Proxy Statement and other material which may be sent to stockholders in
connection with this solicitation. It is contemplated that brokerage houses will
forward the proxy materials to beneficial owners at our request. In addition to
the solicitation of proxies by use of the mails, officers and regular employees
of IAT Multimedia may solicit by telephone proxies without additional
compensation. We do not expect to pay any compensation for the solicitation of
proxies.
We will provide without charge to each person being solicited by this Proxy
Statement, on the written request of any such person, a copy of our Annual
Report on Form10-K for the fiscal year ended December 31, 1998 (as filed with
the SEC) including the financial statements thereto. All such requests should be
directed to the Chief Financial Officer, IAT Multimedia, Inc., Geschaftshaus
Wasserchloss, Aarestrasse 17, CH-5 3000 Vogelsang-Turgi, Switzerland.
STOCKHOLDER PROPOSALS
The Annual Meeting of Stockholders for the fiscal year ending December 31,
1999 is expected to be held in June 2000. All proposals intended to be presented
at our next Annual Meeting of Stockholders must be received in writing and in
compliance with SEC requirements at our executive office no later than March 31,
2000, for inclusion in the Proxy Statement and form of proxy related to that
meeting.
By Order of the Board of Directors,
Jacob Agam
Chairman of the Board and Chief Executive Officer
Dated: August 30, 1999
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PROXY CARD
PROXY
IAT MULTIMEDIA, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
SEPTEMBER 27, 1999
The undersigned hereby appoint(s) Jacob Agam and Klaus Grissemann, or either of
them, each with full power of substitution, as proxies to vote all stock in IAT
Multimedia, Inc. that the undersigned would be entitled to vote on all matters
that may come before the Annual Meeting of Stockholders and any adjournments
thereof.
Returned proxy forms will be voted: (1) as specified on the matters listed on
the reverse side of this form; (2) in accordance with the Directors'
recommendations where a choice is not specified; and (3) in accordance with the
judgment of the proxies on any other matters that properly come before the
meeting.
Your shares will not be voted unless your signed Proxy Form is returned to IAT
Multimedia, Inc. or you otherwise vote at the meeting.
[X] Please mark your votes as in this example.
The Board of Directors recommends a vote FOR the proposals relating to:
WITHHOLD
FOR all nominees AUTHORITY
listed at right to vote for all
(except as marked to nominees listed
the contrary below) at right
1. Election of directors [ ] [ ]
Nominees: Jacob Agam, Marc S.
Goldfarb, Klaus Grissemann,
Erich Weber, Robert Weiss
(INSTRUCTIONS: to withhold vote
for any nominee, write his name
on the line provided.)
- ------------------------------
FOR AGAINST ABSTAIN
2. To ratify the appointment of [ ] [ ] [ ]
Rothstein, Kass & Company, P.C.
as independent auditors of the
Company for the fiscal year
ending December 31, 1999.
SIGNATURE(S)_______________________________ Dated:_______________, 1999
Please sign as registered and return promptly in the enclosed envelope.
Executors, trustees and others signing in a representative capacity should
include their names and the capacity in which they sign.
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